Impose ‘additional taxes on cash dividends exceeding 200pc’

Pre-budget meeting

FE Report | Tuesday, 10 April 2018

The Institute of Cost and Management Accountants of Bangladesh (ICMAB) on Monday proposed imposing additional taxes on the companies' cash dividends exceeding 200 per cent in order to check capital flight in the form of dividend payout.
Nowadays, many multinational companies declare cash dividends ranging from 300 per cent to 750 per cent, ICMAB Executive Director Md Mahbub Ul Alam said at a pre-budget discussion held at the office of the National Board of Revenue (NBR) in the city, with its chairman Md Mosharraf Hossain Bhuiyan in the chair.
"If any company declares cash dividend of more than 200 per cent, NBR should impose additional 50 per cent income taxes on the cash dividend," Mr Alam proposed.
Such a measure would rather encourage companies to offer stock dividends and the investments would remain in the country for a longer period of time, he added.
Other proposals of the ICMAB include increasing tax gap between the listed and non-listed banks, insurance companies and financial institutions to 5 per cent from the existing 2.5 per cent with a view to encouraging them to get listed with stock exchanges.
More organisations also put forward various proposals to the NBR at meetings with the NBR chairman.
Vice-president of the Federation of Bangladesh Clearing and Forwarding Agent Md Mofizur Rahman said trucks loaded with goods had to wait for 20 to 25 days on the other side of Benapole port due to space constraints and called for measures to resolve the crisis.
President of the Association of Export-Oriented Shipbuilding Industries of Bangladesh Abdullahel Bari urged the government to withdraw all kinds of taxes on import of raw materials for the shipbuilding industry to help it produce large ships of better quality for inland and coastal trade.
His other demands included extending loans against trust receipts (LTR) facility to at least two years from the existing one year and bonded life for an imported raw material to six years from four years.
Dhaka Taxes Bar Association president Md Abdul Matin said the government should ensure services for the citizens with a view to encouraging taxpayers to pay taxes and ensuring better use of their money.
He also suggested broadening tax net by bringing building owners under it as a significant number of building owners are evading tax.
Dhaka Customs Agents Association (DCAA) president Sheikh Md Farid in his budget proposal requested the government to make necessary amendments to the customs agents licensing rules-2016 to remove inconsistencies.
Bangladesh Inland Container Depots Association (BICDA) demanded that company tax be reduced to 15 per cent from the existing 35 per cent and advanced income tax to 2.0 per from 6.0 to 8.0 per cent.
They also demanded withdrawal of duty on import of capital machinery, spare parts and pre-fabricated steel structure.
Responding to the proposals, the NBR chairman said companies performing poorly usually declare stock dividends while investors prefer cash dividend to stock dividend.
He said the tax lawyers should convey the message to the taxpayers that the government provides almost all facilities to the citizens as is provided by many developed countries.
"The tax-GDP ratio in Bangladesh has been remaining comparatively low at around 8.0 to 9.0 per cent while the ratio is around 15 per cent in most of the Asian countries," the NBR chairman said, seeking cooperation from all in achieving the revenue target set for the current fiscal year.

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